The future of customer service needs a new model of operational excellence

Enterprise software budgets are different today, and the solutions delivered must be optimized, personalized, catered to the specifics of the organization, and adaptive to the shorter business cycles, this according to research and consulting firm ThinkJar.

Esteban Kolsky is a principle and founder of ThinkJar, customer strategist, researcher and analyst, consultant, board advisory member, and keynote speaker with more than 30 years of customer-facing positions and 20 years of technology analyst experience. Kolsky recently interviewed 124 customer service practitioners about their technology vision, business strategy, and investment thesis and points of view on key industry trends such as digital transformation, role of artificial intelligence, internet of things, and other emerging technologies for the next five years.

Also: 10 digital transformation tips to help your business TechRepublic

I spoke with Kolskly and asked him to share highlights of the 2018 Customer Service Study, specifically focusing on the new model of operational excellence that is needed for companies to deliver exceptional service in the age of the connected customer.

The most revealing truths about the evolution of customer service, according to ThinkJar:

• Customer service became rooted in operations, making the COO the top executive for execution.
• Customer experience and customer engagement initiatives are now led by customer service.
• Evolution of self-service; web self-service to chatbots to anywhere-everywhere knowledge.
• Low-value of social as a channel for delivering service, and the subsequent decline.
• Change of voice as the channel-of-last-resort to email and chat replacing it.

Here's the high-level summary of ThinkJar's 2018 Customer Service study:

Also:The 5 biggest challenges to digital transformation TechRepublic

Budgeting

A virtual unanimous perspective of ThinkJar's study was that the budgets for improvement, operations, and even innovation in customer service were all coming from digital transformation initiatives. This is critical to understand for two reasons:

• Return Expectations: Traditionally the return on investment in tactical projects associated with cost centers has a short timeframe: Either an ROI is achieved within a fiscal year or the project is not viable. Shifting from tactical implementations to strategic ones has changed the nature of customer service: It went from doing short projects as "proof of concepts" that then grow (eventually and hopefully), to planning and measuring appropriately success over the long run. As a result, return on investments and expectations have moved from "within twelve months" to attaining long-term, strategic goals.
• Leverage: Among the many benefits of adopting platforms and cloud operations is the idea of sharing resources widely. A new knowledge management and self-service solution for customer service agents to find what they need to answer questions from customers is no longer just that simple implementation - it can be leveraged for human resources self-service, marketing content management, and even as the power behind online communities. Being able to do more with the same, or less, if one of the best features of digital transformation.

"Budgets are now growing and contrary to what we saw (mostly) for the last decade, it is not about either "fixing" what's broken, maintaining what we have, or about testing new stuff. Budgets have become, finally, strategic." -- ThinkJar

Spending Priorities

As customer service becomes more strategic, the spending priorities have shifted in the past two years to be more aligned with enterprise-wide initiatives. The top three areas of investment are not just for customer service operations:

1. Customer Experience and Customer Engagement: This item has been at the top of the list of the last two years, and it was in the top five for three more years before that. It will continue to power investments for enterprise initiatives for a few more years considering the importance of the strategy for the long-term health of the organization.
2. Automation: This has been a consolidation of previous customer-service only focus on selfservice, artificial intelligence, and machine learning. The previous budgets for those items that were affecting only customer service are now expanding to accommodate the needs from other departments in the organization as well.
3. Operational Excellence: This is a combined view of projected related to customer centricity, outcome driven operations, focus on digital operations, automation and optimization.

"This focus clearly shows a shift from tactical contact center investments to a more strategic focus on how to build a digital enterprise." - ThinkJar

Technology Adoption

According to ThinkJar: The future of customer service is about giving customers more control and better access to operations, so they can build their own experiences in real time. To do this, in addition to investing and moving customer service to cloud-based operations, the focus in on how to work better with automation.

Also: Digital transformation: A cheat sheet TechRepublic

"Nearly 80 percent of transactions that customer service carriers out can be automated. Half of those can be done easily, the rest require better tools to learn how to automate them, improve the processes behind them, and test and deploy automated events. Until recently, maybe three-to-four years ago, this was mostly focused on customer service via self-service and lately even chatbots. The success of those operations over the last decade made it an organization-wide strategy aligned with digital transformation," said Kolsky. Kolsky has also written about the dangers of over automating customer service. Kolsky refers to a diagram that shows the journey of automation from advanced analytics to AI.

"Embracing artificial intelligence in customer service is about understanding what you are trying to do, how you are doing to do it, and ensuring that the tools used to make it happen are the right tools and work as expected," said Esteban Kolsky.

Data

ThinkJar's study shows that the value of using data is focused on three things, not just efficient operations:

1. Customer Centricity: When moving to customer centric operations the metrics used must invariably change. Customers don't care as much how many calls an agent can do in a shift, or how long an email chain becomes, or if SLAs are met, but are focused on finding an accurate answer, quickly and easily.
2. Outcome-driven Operations: Effectiveness metrics are outcomes (there are five outcomes, understanding, resolution, learning, expectations, and engagement - all resulting from doing certain actions well, not as a direct action that can be measured). We cannot measure a value for resolution (we can measure whether a problem has been resolved or not - and how long it has taken, and what resources it used, and what lessons we learned so we don't have the same problem again, etc.) but we can calculate an index on resolution that collects different pieces of data related to resolution. These indexes are different metrics than we traditionally used in customer service; different thinking applies to using them to monitor outcomes.
3. Automation: Automation relies on using clean data for the computer to make decisions. This is critical as we embark in predictive and proactive models for customer service, focus on optimizing schedules and actions, and prepare to deliver the new models for customer service.

ThinkJar's study also identified trends regarding channel usage, cloud, platform and ecosystem adoption trends and business benefits. The study found that 1. The cloud can perform and do what's needed for customer service, 2. Platforms are necessary for customer service going forward and 3. Ecosystems are the way of life going forward. All of these findings were summarized in what the study called Future of Customer Service.

Also: Five emerging technologies for faster digital change

The Future of Customer Service

A new model of operational excellence is the underlying foundation of new versions of customer service. ThinkJar's new model for customer service has five areas that customer service practitioners need to consider in their strategies:

1. Outcomes-first: When the focus shifts from effective operations and cost-cutting to what the customer needs, the results, method, and operations will change with it. Knowing what the outcomes are, how to measure them, and how to know whether they are successful or not is the most critical part. In the previous model the only outcome was make it good and cheap, in this new model - the outcomes change as execution changes.
2. Customer-centric: While previously to be customer-centric meant, erroneously, to focus exclusively on what the organization understood they wanted and then spend resources trying to deliver to that, in some cases not even making it economically feasible for the company, the new model is predicated on the fact that customers' needs, and desires change constantly as the operations the company provides to serve those needs.
3. Data-driven: As digital transformation takes over the enterprise, the only requirement it has is that data be used smartly to power and optimize processes in a continuous manner. No longer we have fixed, single-event processes to power business functions, now they are part of much larger, and more complex, end-to-end experiences. To ensure they remain focused on the outcomes and the metrics that matter, driving these experiences via data is essential - and being data-driven also allows it to, eventually, become more automated: The end goal for customer service.
4. Automation-focused: Between forty and eighty percent of customer service interactions can be automated, from simple inquiries to more complex transactions. The other 20 percent remains part of the exceptions and unaccounted processes that should be handled in partnerships between automation systems and humans. The new customer service operational excellence is to automate as much as possible - not for cost-savings, but to put the customer in charge or their own experiences and faster resolution.
   
5. Ecosystem-based. To achieve complete end-to-end experiences, driven ad-hoc by customer demands and needs the organization must embrace an ecosystem mentality. In this mentality the goal is to deliver the most complete experiences regardless of whom, or where, the information resides. Having an open cloud architecture with a public platform and all the benefits it brings allows any organization to build an ecosystem model to power operations.

"In addition to these five areas there is and one underlying concept: Work collaboratively with customers to co-create value at each interaction with the long-term goal of achieving engagement the ultimate outcome," said Kolsky

Also: Digital Transformation: A CXO's Guide

To learn more about ThinkJar's 2018 Customer Service study, you can connect directly with Kolsky. Kolsky regularly blogs on customer service and experience related topics. He also has a very sharp and insightful point of view on digital transformation and key enabling technologies. I highly recommend that you engage with Kolsky regarding this specific study and any other customer facing and strategic business related initiatives.

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